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Easing the pressure with Supply Chain Finance

Published on 7th October 2018 - Last update on 31st March 2020

An issue that many UK business’ often face involves maintaining a reliable supply chain, which is vital for your ability to deliver high-quality goods and services to your customers on time. Yet, as intrinsic as your supply chain is to your success, staying on top of it is not always a straightforward matter. Whether you trade regionally, nationally or overseas, any delays in your supply chain can create a real headache for you. But rather than stand by idly, you could ease the pressure on your business’ finances by applying for Supply Chain Finance.

Why should I apply for Supply Chain Finance?

Managing a supply chain is all about the process of buying and selling goods with other businesses in your sector. Regardless of whether you operate in such sectors as retail, catering or construction, for example, monitoring this aspect of your business closely is crucial for satisfying customer demand and meeting project deadlines. However, there is any number of reasons why your supply chain might be causing you issues. It could be that the supplies you’re waiting for are taking time to pass through customs or have been caught up in red tape, making it impossible for you to utilise or generate a profit from them until they’ve arrived, other times it may even be the case that the end customer is late in making payment to your business, leaving you out of pocket in the meantime.

Yet, no matter what it is affecting your supply chain, acting fast is vital in order to minimise the strain on your business, which is where Supply Chain Finance can help. Supply Chain Finance offers business owners like yourself the means to support your business and resume day-to-day operations without having to use your own savings or divert funds away from other key areas.

Are you waiting around for supplies that you’ve purchased? Or are you waiting to be repaid by one of your business clients? Apply for Supply Chain Finance or learn more about how your business could benefit.

How do I apply for Supply Chain Finance?

What makes Supply Chain Finance so useful for a wide range of UK businesses is that it can support all manner of financial situations. So, although lenders will often ask to review your personal and business credit profiles on application in order to understand your current financial situation, possessing an adverse credit rating may not always be used against you. This is because when applying for Supply Chain Finance, lenders will take into account other factors such as:

  • How much of your trade is carried out using Business-to-Business (B2B) invoices
  • How much your invoices are worth
  • Your annual turnover
  • How frequently you update your ledgers
  • The reliability of your credit control procedures
  • And the reputation of the debtor (or end customer) responsible for repaying your business according to the invoice(s).

As such, if you’re waiting on supplies or if the end customer is late in resolving the debt they owe, Supply Chain Finance could be a great way of granting your business the support it needs to move forward. Plus, depending on the complexity of your request, some lenders may even be able to offer you an agreement in as little as 24 hours, with funds being released soon after. But before applying, it’s vital that you fully understand how this form of funding works so that you can make an informed decision about its suitability for your business.

How does Supply Chain Finance work?

Supply Chain Finance is a form of Invoice Finance which allows you to release up 90% of the capital contained within any business-to-business (B2B) invoice worth in excess of £5,000. As such, you can release funds from any unpaid invoice regardless of whether it’s late being repaid or you just need to access the money sooner than expected. Plus, because this form of funding usually doesn’t impose any usage restrictions, you can go on to provide funds for any aspect of your business, making sure that you don’t lose out. Nevertheless, Supply Chain Finance offers you access to two of different types of products: Factoring and Discounting

Factoring 

Factoring requires your business to have a minimum turnover of no less than £100,000. However, using this option does allow you to let the lender pursue the debtor on your behalf, whilst being confidential about the fact that you’re using their services. In addition, some lenders may provide bad debt protection as standard, safeguarding your business in the event that the debtor doesn’t pay or falls into liquidation. Once the debt has been repaid, the lender will release a balance (for example, the remaining 10%) minus costs and fees.

Discounting

Discounting, on the other hand, this requires your business to have an annual turnover in excess of £25,000 and be able to collect the debt using your own credit control procedures. But instead of the debtor paying your business, they’ll pay directly into a lender-controlled facility. Once the debt has been repaid, the lender will release a balance (e.g. the remaining 10%) minus any costs and fees.

Need help supporting your supply chain?

Delivering a consistent flow of goods and services to your customers is vital in order to generate a reliable cash flow. Yet, in order to do so and meet customer demand, you need to manage your supply chain effectively. However, this is where complications can arise, especially if supplies are late in arriving or you’ve not been paid on time. Fortunately, this is where Supply Chain Finance can help, granting you funds to support your business in the meantime. All you need to do is source the most appropriate agreement from a lender you can trust.

At Rangewell, we’re an Access to Finance specialist and have mapped over 400 lenders to offer business owners like yourself an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you throughout the application process. So if you’re looking to support your business’ supply chain and need access to additional funds, apply for Supply Chain Finance today or find out more with Rangewell.


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David Harrison

David Harrison

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